Pieria View

Now the many horrors of 2016 are behind us, the world is waking up to the horrors that await in 2017. In particular, the UK is bracing itself for the triggering of Article 50 of the Lisbon Treaty marking the formal notification of Britain’s intention to leave the European Union. In and of itself, there is no great significance attached to the event. It marks the start of the two year mandated negotiation period, after which either both sides will have reached some sort of agreement, there is a unanimous vote to extend negotiations or Britain is unceremoniously dumped out of the EU and into WTO rules. Well, that’s a 2019 problem which we’ll have to deal with when we get there. In 2017, the problem facing the UK government is twofold: How to come up with a negotiating platform that leaves open the possibility of a non-disastrous settlement for the UK and how to keep those who voted to Leave onside as the inevitable compromises get struck. Ah, you’ll hear some say, Prime Min...

There are a lot of column inches currently being devoted to an increasingly popular idea: That the benefits of globalisation and free trade haven’t been sufficiently broadly spread and something must be done . This has been variously conceived in the form “globalisation’s losers”, “Rust Belt rebellion” and “back row kids” and has been placed at the centre of the anti-establishment wave sweeping developed economies. Without wanting to antagonise the no doubt well-meaning authors of such pieces, however, I’m not at all convinced that at this stage addressing national inequality using globalisation reparations frame is a good guide for public policy. For an example of this argument, see Gavyn Davies recent column in the FT (emphasis mine): “Economists have now recognised these dangers, and a new consensus has started to emerge. There has been (almost) no change in the overwhelming belief that free trade and globalisation are good things for society as a whole. But it is now ...

My new site, Pieria , launched last week devoted to improving and expanding the debates in finance and economics. Below is a short summary of what the site is about and what it offers so please do come join the discussion! What is Pieria? Pieria is like going to your favourite cafe, if your favourite cafe is frequented by some of the best people in their field; discussing and debating the big issues of the day, a melting pot of ideas, disciplines and points of view. It’s an ongoing conversation and we’ve designed the site to reflect this.   The main navigation is divided between macro and micro sections, which together give a rounded overview of what’s going on right now in the economy.  On the homepage you will find the daily ‘HOT TOPICS’ and is a good starting point for exploring the site. These articles combine a briefing report with in-depth commentary on a single key issue that people are talking about or one which we think worthy of wider discussion.  Hot Topi...

It is fair to say that I would not have imagined myself writing a post in defence of the Office for Budget Responsibility. Nevertheless, here I find myself (sort of). That is not to say I intend to offer any excuses for the OBR’s worryingly poor forecasting record for UK economic output, which have been used all too frequently as a fig-leaf to cover a litany of equally poor policy decisions. Instead I want to defend Robert Chote and his team from a particular charge levelled at them by the FT’s Chris Giles last week. In an article entitled “ How to ‘plog’ the hole in our awful public finances ” Giles writes: “Had the OBR assumed significant spare capacity now alongside extremely weak growth in the economy’s potential output, it could combine a lacklustre forecast for output growth without the assumption that spare capacity would still exist in 2017-18. The benefit would be a logical and consistent forecast, but the assumptions would come at a cost: the OBR ...

Empathy : The ability to imagine oneself in another’s place and understand the other’s feelings, desires, ideas, and actions. When faced with an example of injustice it is a common psychological trait to relate the suffering of others to our own experiences. While this can be helpful in fostering greater insight into the personal hardships they may be undergoing it can also cause people to prioritise the similarities of their situations and underplay the differences. It is in this light that I view attempts to liken the haircuts to Cypriot depositors to ultra-low interest rates in Britain. Yet to my mind this false equivalence does a disservice to understandably panicked depositors in Cyprus and causes undue concern for savers in the UK. I first came across this particular line of argument on twitter in a tweet from Ros Altmann , former director general of Saga and pensions expert. She wrote: “UK vs. Cyprus - Sterling devaluation +inflation +ultra-low...

As sterling hits another new low against the dollar many have started question whether the supposed benefits of a weak currency have been overstated. Among the voices within the sceptic camp is Andrew Sentance, former Monetary Policy Committee member and currently senior economic adviser at PWC. In a recent blog post Sentance suggests that while Britain’s economic weakness and reduced fear over a eurozone collapse have both played their part in lowering the value of sterling, there has also been a concerted effort by policymakers to “talk down the pound”. He writes: “[A] weak pound appears to be an important ingredient of official economic policy. Government ministers, including the Chancellor, have talked of rebalancing the economy and emphasised the role of a competitive currency in achieving this. The Governor of the Bank of England has argued along the same lines. In his major speech earlier this week, he argued that the 25% fall in the value of the pound ...